Central banks that are mulling over issuing their own cryptocurrencies would be better off waiting, said the Bank for International Settlements.
According to a news report in Reuters, while central banks use digital money, the risks of issuing cryptocurrency haven’t yet been fully assessed, and the underlying blockchain technology is not yet proven, as the Bank for International Settlements said in its quarterly review. According to BIS, what would be unique to cryptocurrency issued by central banks is that it would be exchanged directly between the payer and payee, eliminating the need for a middle man.
“While it seems unlikely that bitcoin or its sisters will displace sovereign currencies, they have demonstrated the ability of the underlying blockchain or distributed ledger technology (DLT),” BIS said in the review. What’s more, BIS said that beyond anonymity, there aren’t really any benefits to consumers in using cryptocurrency.
“Most of the alleged benefits of retail central bank cryptocurrencies can be achieved by giving the public access to accounts at the central bank, something that has been technically feasible for a long time, but which central banks have mostly stayed away from,” it said, according to Reuters. Whether or not a central bank should issue digital currency is a pressing question for countries like Sweden, where cash usage has been declining at a rapid rate during the last 10 years. BIS said that individual countries will have to decide on their own if issuing cryptocurrencies is helpful in their economies.
The call on the part of BIS in its quarterly review comes at a time when regulators in a slew of countries are clamping down on cryptocurrencies and ICOs. China has already banned ICOs in the country and is moving to ban bitcoin transactions by the end of the month, according to media reports.